Understand the Legal Risk of Inactive Land Ownership in Indonesia
If you own land in Indonesia under HGB (Right to Build), HGU (Right to Cultivate), or Hak Pakai (Right to Use). Especially through a foreign-owned company (PT PMA), it is crucial to understand that the government may reclaim your land if it is left inactive for two consecutive years. This policy is based on Government Regulation No. 20 of 2021 concerning the Control of Abandoned Areas and Land (Peraturan Pemerintah Nomor 20 Tahun 2021). The regulation aims to support Indonesia’s Land Reform program, which redistributes unused land to local communities in need. Currently, the government has identified over 1.4 million hectares of abandoned land across the country. If your land is classified as idle or unused, it could be subject to repossession by the state.
What is Considered “Abandoned Land”?
A land is deemed abandoned if:
- It is not used or developed in accordance with its designated purpose.
- The owner fails to fulfill administrative or legal obligations, such as reporting activities or paying taxes.
- It has shown no clear development for more than two years.
The Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN) will issue three formal warning letters before the land is officially declared abandoned and taken over by the government.
How Does the Government Monitor Land Activity?
The Indonesian government uses several indicators to assess whether land is active:
- Compliance with your land use rights (HGB, HGU, or Hak Pakai)
- Presence of buildings, cultivation, or other visible developments
- Fulfillment of obligations (Building permits (IMB/PBG), Annual tax payments (PBB), Environmental and spatial reporting, Business activity reports (especially if owned by PT PMA).
If your land is registered under a foreign-owned company (PT PMA), your company must operate in accordance with its approved business activities, and report progress to the relevant authorities.
Why This Matters to Foreign Investors
Many foreign investors purchase land in Indonesia via a PT PMA, thinking long-term about property development or agricultural business. However, failing to activate or develop the land can result in the government reclaiming your investment.
Even if you legally own the land through HGB or Hak Pakai, non-use is seen as a violation of the public interest. Land is a national asset in Indonesia, and the government has the right to reallocate land that is not being used responsibly.
Owning land in Indonesia is a valuable investment, but it comes with strict legal obligations. The Government Regulation No. 20/2021 is clear: land that remains idle for two years risks being classified as abandoned and taken over by the state. Don’t let your investment slip away due to compliance issues or lack of legal oversight.
Contact Indoned Consultancy Today – Free Legal Consultation
At Indoned Consultancy, we specialize in assisting foreign investors and PT PMA owners to protect their land rights, ensure compliance, and avoid government sanctions.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
